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The Reserve Bank of India on Monday introduced the Internal Ombudsman mechanism for select non- banking finance companies.
“...the Reserve Bank...has directed Deposit-taking NBFCs (NBFCs-D) with 10 or more branches and non-deposit taking NBFCs (NBFCs-ND) with asset size of ₹ 5,000 crore and above having public customer interface to appoint Internal Ombudsman (IO) at the apex of their internal grievance redress mechanism within a period of six months from the date of issue of the direction…,” it said.
NBFCs including stand-alone primary dealer, NBFC-Infrastructure Finance Company, core investment company, Infrastructure Debt Fund - NBFC; NBFC – Account Aggregator; NBFCs under Corporate Insolvency Resolution Process; NBFCs in liquidation and NBFCs having only captive customers have been excluded from the directive.
“The IO shall deal only with the complaints that have already been examined by the NBFC but have been partly or wholly rejected by the NBFC. In other words, the IO shall not handle complaints received directly from the customers or members of the public,” the RBI said.
The central bank had in the Statement on Developmental and Regulatory Policies as part of the Monetary Policy Statement in October this year announced the move while noting that the increased significance, strength and reach of NBFCs across the country has necessitated having in place better customer experience including grievance redress practices.
“The implementation of the IO mechanism will be monitored by the NBFC’s internal audit system apart from regulatory oversight by RBI,” it further said.
The person appointed as the IO shall be either a retired or a serving officer, not below the rank of Deputy General Manager or equivalent in any financial sector regulatory body or any other NBFC, bank, with necessary skills and experience of minimum of seven years of working in areas such as non-banking finance, banking, financial sector regulation or supervision, or consumer protection, the RBI said.
Further, the person should not have worked or be working in the NBFC or companies in the Group to which the NBFC belongs and he or she should not be above the age of 70 years at any point of time during the tenure as IO.
The NBFC may appoint more than one IO depending on the number of complaints received per branch network. In such a case, the NBFC shall define the jurisdiction of each IO.
The NBFC shall put in place a system of periodic reporting of information to Reserve Bank on a quarterly and annual basis.